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Decreasing Term Insurance

Decreasing term insurance is a form of life insurance that pays an ever decreasing amount as a payout on the death of the insured. The lump sum amount paid out is calculated on a straight line scale that reduces to zero by the end of the term. Read more...>

Cover Details

Type of Cover
Amount of Cover (£)
Over What Term (yrs)
Level or Drecreasing Cover
Premium Type

Single Application

Title
First Name
Last Name
Smoker?
Date of Birth

Joint Application - if applicable

Title
First Name
Last Name
Smoker?
Date of Birth

Your Details

House Name / No
Street Address
Town / City
Post Code
Home Telephone
Work Telephone
Mobile Telephone
Email Address

The premiums are fixed at the start of the term and do not reduce with time. For people who have a mortgage or other loan that is regularly paid off leaving less to pay each year the decreasing term insurance can be calculated to cover the full repayment.

As with other forms of life insurance the level of premiums are calculated against a number of personal as well as well as financial factors. The cover required will be at its highest at the start of the policy and then the length of the term will be decided by the insured in relation to the length of time the mortgage or loan runs for.

Just like level term insurance the premium will also take into account medical factors such as family health history, whether the insured is a smoker and how much alcohol they drink. Insurance companies base their business on assessing risk factors and that is how they calculate all life insurance premiums including decreasing term.

The premium is usually paid as a monthly direct debit these days as forgetting to pay the premium may invalidate the cover.

There is no cash-in value to a decreasing term insurance policy. The insured cannot stop payments and ask for their money back and there is no payment at the end of the term if no claim has been made.

Top Tips

A decreasing term insurance policy has little use as an insurance policy unless it is used to pay off a decreasing loan
Although the payout decreases over the years, the premiums do not therefore, as the policy approaches its end, the proportional cover is reduced
The decreasing term insurance should be carefully matched to the loan or mortgage that it is designed to pay for. It should decrease in potential payout at the same rate that the mortgage is reducing
There are less examples of decreasing term insurers, than level term, so it’s worth comparing the available market if you want this type of cover